Iraq plans a pipeline to link southern oilfields in Maysan province to major export storage depots and China Petroleum Pipeline (CPP) is close to winning the $650 million contract, a senior Iraqi oil official said on Tuesday.

"This project will expand oil export capacity from producing oilfields of Maysan and Halfaya, and other small fields. It will definitely remove all exports constrictions," the chief of state-run Maysan Oil Co., Ali Maarij, told Reuters.

The line will carry oil produced from these fields to al-Fao storage depots and then to offshore terminals in the Gulf, he said.

He added that CPP was close to winning an engineering and construction contract to build the 300 km (186 miles) 42-inch pipeline.

China's CNPC, France's Total and Malaysian state company Petronas are developing the Halfaya oilfields, and the 2.5-billion-barrel Maysan complex is run by China's CNOOC and state-run Turkish Petroleum Corporation (TPAO).

Maarij said current production from oilfields developed by foreign firms and other small fields has reached around 230,000 barrels per day (bpd).

The export pipeline is scheduled to be operational at the start of 2014 to start handling a planned increase of output to reach around 400,000 bpd, Maarij said.

It will replace an existing outdated 28-inch pipeline currently shipping crude from the southern fields in Ammara to crude storages near the city of Basra.

Export infrastructure, rather than production, is the main hurdle to the OPEC member country keeping exports steady, forcing Iraq to review its final production target of 12 million bpd.